Regulatory due diligence

Ensure your M&A due diligence is robust

When it comes to mergers and acquisitions, financial and commercial due diligence are often the focus of attention. However, in regulated markets, it’s also critical that both purchasers and vendors carry out regulatory due diligence before any deal is agreed.

For the purchaser, regulatory due diligence can help to avoid ‘buying into’ unknown risk or legacy issues from the back-book.

For the vendor, it can help evidence value or identify unknown issues before going to market, ensuring steps are taken to improve controls to mitigate any risks identified or ring-fence any regulatory issues away from the commercial deal.

Whether your firm is the purchasing firm or vendor, it is important to ensure a comprehensive approach, which considers the inherent risks in the firm’s business model and strategy, and any key regulatory risks aligned to this.

It is important to have a thorough understanding of regulators’ expectations of firms and their areas of interest.

A comprehensive due diligence programme should also cover both conduct and financial crime risk, taking both a ‘top-down’ and ‘bottom-up’ approach to this process.

Huntswood’s regulatory experts provide clients with:

Assessment of the regulatory risks inherent in a firm’s products, processes, oversight and outsourcing arrangements, and identification of the potential impacts on post-acquisition revenue and risk

Determining the effectiveness of the firm’s internal controls, including the regulatory and compliance infrastructure, training and competency, complaints handling standards, financial crime mitigation, business continuity plans and quality of MI

A clear view of any risks presented, and an impact assessment based on our deep knowledge and understanding of industry practice and regulatory expectations. Where required, we will also outline the work that will be required to correct issues – it’s not always the case that regulatory issues should cause a purchasing firm to walk away from a deal